It's that time again... time to check in on the week's news in Suits by Suits:

The United States Court of Appeals for the First Circuit issued its opinion in Velazquez-Perez v. Developers Diversified Realty Corp, No. 12-2226 (May 23, 2014), holding that an employer can be liable for sex discrimination under Title VII of the Civil Rights Act of 1964 when an employee is terminated at the instigation of a “jilted co-worker intent on revenge.” (We wouldn’t have used the word ‘jilted.’) Surprisingly, this is a case of first impression.

Ok, so we discuss noncompetes a lot here on this blog -- but even we were surprised by this next story. Apparently God himself -- or herself; we're open-minded types -- has now gotten in on the act. Patheos blogger Warren Throckmorton discusses the interesting case of Phil Poirier, a community group pastor who was essentially fired from the Mars Hill megachurch in Everett, Washington for his refusal to sign a non-compete agreement that would ban him from taking a “next church ministry” within ten miles of any Mars Hill church (which has hundreds of “branches” across the U.S.). Throckmorton is continuing to update the fascinating saga, including creating a “no-compete zone” map highlighted in red that illustrates the practical consequences of the clause Poirer refused to sign. (Hint: it's virtually all of the state of Washington.)

Now that we’ve discussed religion, I suppose we can check in on a hot-button political issue, too. Stoking the debate over executive pay inequality is a recent survey of CEO pay conducted by the Associated Press (using data provided by Equilar, an executive pay research firm). The AP’s findings are that that the median CEO received $10.5 million in compensation in 2013, up 8.8% from the previous year. Of that, $1.1 million is in base salary (up 4.8% from 2012), with the largest incentive-based components being cash bonuses (median $1.9 million, up 12.6%) and stock awards ($4.5 million, up 4.2%).

Consequently, one of the arguments deployed by other states looking to restrict or ban noncompetes is that the business climate created in California encourages worker mobility, and that climate in turn is attractive to the technology sector (and in particular, to technology start-ups), who depend upon “poaching” away top talent that may be underpaid at a competitor. You can read these arguments in more depth here (part 1), here (part 2), and most recently here (part 3).

The common thread that runs through these arguments is that California encourages worker mobility, and that mobility, in turn, is good for Silicon Valley. The argument has some appeal. Read More ›

While we’re a blog about disputes between executives and companies, we can’t overlook those significant days when those companies and executives pause for a national holiday. Through our first year, we’ve looked at how holidays – when most business stops and courts close (putting a brief halt to the disagreements we cover) – came to be, and their impact on the American workspace.

Assuming you are not reading this while you’re driving, you may find this collection of developments in the world of executive employment disputes and related fields to be interesting:

Some interesting thoughts about the criticism The New York Times faces after its surprise firing of executive editor Jill Abramson is here; it includes this truism: “An important lesson is for employers to understand that the leverage that they may have over employees in the workplace does not necessarily extend to the court of public opinion.”

Maybe he’s not an executive, but he’s certainly a high flyer: an air marshal who was fired after discussing cutbacks to the air marshal program on television will have to defend his appellate victory at the United States Supreme Court. Robert MacLean convinced the U. S. Court of Appeals for the Federal Circuit that he should have been allowed to use a whistleblower defense when the TSA undertook to fire him; this week, the Supremes agreed to hear the government’s appeal of that ruling.

Insert the Memorial Day beer-drinking pun of your choice here:A St. Louis jury returned a verdict in favor of megabrewer Anheuser Busch this week, finding that it did not discriminate against a former top-ranking executive when it paid her less than men in similar positions. Even though her bonus and salary were over 40 percent lower than her male predecessor’s, the jury found no evidence to support the executive’s claim of gender discrimination.

We’ve writtenaboutthis issue before, but it bears repeating: as a general matter, the more narrowly tailored and economically justifiable a non-compete agreement is, the more likely it is to be enforced (assuming state law allows it at all). The same standard applies to the closely related “non-contact” clause that keeps former employees from luring their old colleagues away to new positions.

An Arizona appellate court’s decision earlier this month reinforces this principle. That court held – in Quicken Loan v. Beale – that a “non-contact” clause that kept former Quicken loan managers from contacting current loan managers for two years wasn’t narrowly tailored to protect Quicken’s financial interests, and was an unreasonable restriction on the former employees’ speech rights. And, on a purely financial note, the court affirmed that Quicken had to pay its former employees’ attorney’s fees – as well as the fees the former employees’ new company, loanDepot, incurred when it jumped into Quicken’s suit. Read More ›

Let me explain what that means: “vouching” is, for us members of the bar, both a technical term and a no-no. When it’s done at the trial of an executive employment dispute, it can unfairly prejudice the jury – and, ultimately, the “vouched-for” side can have its victory overturned by an appellate court. We’ll see how this happened in the case of one Mindy Gilster.

Bon-Ton Stores, Inc. alleges in a lawsuit that it recently filed against its former Senior Vice President, Director of Sales Gary Pralle that – after the company fired Mr. Pralle – it discovered “pornographic materials” and “documents containing racial slurs” in his e-mails. According to Bon-Ton, had it known about this “after-acquired evidence” before it fired Mr. Pralle, it would have had “cause” for firing him under its “Executive Severance Pay Plan” such that Mr. Pralle would not be entitled to severance. In other words, Bon-Ton v. Pralle is an example of a company invoking the after-acquired evidence doctrine to overcome a breach of contract claim. (Bon-Ton also alleges that bad behavior by Mr. Pralle that the company knew about before it fired him also gave the company “cause,” but those allegations mess up the example so we’re ignoring them.) Read More ›

I thought April showers brought May flowers, but the month of May has brought both showers and flowers to the DC-Baltimore area. Luckily, our colleague Andrew Torrez was not parked on the Baltimore street that was swept away by the recent deluge. As for this week’s news in employer-executive disputes, we’ve managed to pluck a few tidbits that have bloomed despite the storms:

In the continuing saga of a proposed ban on non-compete agreements in Massachusetts (which we have covered here and here), 37 technology CEOs recently wrote to the state legislature to advance the cause of the ban, reported Kyle Alspach of BetaBoston;

Two trade associations have resolved an expensive dispute over poaching of employees. Dietrick Knauth of Law360 wrote that TechAmerica sued the Information Technology Industry Council for hiring away the leaders of its government procurement team, but has now agreed to a settlement. TechAmerica argued that the Council wanted to put it out of business by stealing its member companies.

Patron Tequila settled during trial with an executive who claimed that he was entitled to $70 million in bonuses – and just in time for Cinco de Mayo. City News Service said that Ajendra Singh sued Patron and its founder, John Paul DeJoria, alleging that he was promised equity bonuses based on the value of the company in exchange for operating its new factory in Mexico.

A California Senate committee is recommending a bill that would raise corporate taxes for companies who have CEOs that make more than 100 times that of its median worker, and would provide tax benefits to companies whose CEOs make less than that ratio. Harold Meyerson of the Washington Post wrote that the bill was “one of the few remaining avenues that could enable workers to regain some of their lost income,” “in the absence of both unions and full employment.”

Melissa Lipman of Law360 reports that eBay settled an antitrust suit alleging that it entered into an anti-competitive agreement with Intuit not to recruit each other’s employees. The deal includes an injunction and a $3.75 million payout. The $3.75 million is more than the price for the third most expensive item ever bought on eBay – lunch with Warren Buffett.

If you’re confused by this headline, you’re not alone. But you can’t be as confused as Debourah Mattatall must be after losing her lawsuit against her former employer, Transdermal Corporation.

The origin of Mattatall’s lawsuit, appropriately enough, was another lawsuit. Mattatall used to own a company called DPM Therapeutics Corporation. DPM’s minority shareholders sued her to prevent her from selling the company to Transdermal. She went ahead with the sale anyway, and signed a Stock Purchase Agreement and Employment Agreement with Transdermal. According to Mattatall, Transdermal didn’t fulfill its obligations under those deals, citing a lack of funds.

After Mattatall’s sale to Transdermal was final, Transdermal brought its own suit against the DPM minority shareholders. All parties, including Mattatall, eventually settled the two shareholder cases. Before agreeing to the settlement, Mattatall complained about the money that she was owed under the Stock Purchase Agreement and Employment Agreement. Transdermal’s counsel assured her that her claims were “wholly extraneous” and she would be “free to pursue” her claims against Transdermal.

In the written settlement, however, everyone released the claims that they “had, has or hereafter may have” against any other party. Thus, even though Transdermal hadn’t sued Mattatall, according to the language of the release, she was giving up her claims against it. The settlement also included a “merger clause,” under which all prior understandings were “merged” and “supersede[d].” Read More ›